The longest U.S. economic expansion
By Wadi'h Halabi
The monopoly media has been celebrating the longest expansion in U.S. history - eight
years, 10 months. If unemployment was the criterion, the expansion would be at least
18 months shorter.
The government estimates 9.6 million people are unemployed or want work; 55 million
U.S. residents are so poor and housing costs so high that mass homelessness and
chronic hunger rose during the expansion. Two million are in prison, 44 million lack
health insurance. If this is "as good as it gets," that tells us about capitalism
today.
Still, compared to other capitalist countries, the U.S. appears as a botanical garden
in a world of instability and wars. By one count, of the eight worst economic crises
since the 1930s, seven have occurred since 1990 - all in other countries. Why has the
U.S. economy been relatively stable?
The first thing to keep in mind is that the world economy is not entirely capitalist.
States created by socialist revolutions, including China, Vietnam and Cuba, account
today for more than 10 percent of world production. The economies of these states are
not cyclical, because planning predominates, even after capitalist inroads.
Compare U.S. cycles with the decades in the Soviet Union (before restoration) or
China, without a boom-bust cycle. 1990-91 and 1997 marked global turns for the worse
in capitalist overproduction.
Normally such turns would have led to all-out crisis. But China continued to grow, at
the fastest rate of any major economy. Its purchases from capitalist countries tripled
between 1990 and 1999 and could exceed $200 billion in 2000.
China's purchases can act like powerful "anti-clotting agents" that help keep the
capitalist system from congealing in crisis. In 1993, the chief international
economist for a Wall Street bank even admitted that without China's purchases, "there
would be world chaos."
But back to the U.S. stability. Explanations for this stability include regulation of
interest rates by the Federal Reserve; government expenditures ("Keynesian
mechanisms"); advances in technology; and bank-deposit insurance. All imply that
capitalism has learned to regulate if not overcome its cycles. Nothing could be
further from the truth.
A simple test of the validity of these explanations is to ask, Why don't other
capitalist countries use these measures to avoid the problems they are facing?
Most have tried. The Japanese economy has been stagnant or in recession for a decade.
In efforts to revive it, the Japanese government has been making capital available at
no interest. It has spent hundreds of billions of dollars on stimulative packages. The
economy remains in recession. Now the Japanese government is neck-deep in debt and
Moody's just placed it on credit watch.
It is impossible to understand the U.S. stability in national isolation. A stunning
statistic, revealed in Business Week, is that the U.S. economy is using 72 percent of
the world's savings. Capital has been flooding into the U.S. since the Gulf War and
U.S. capitalists use this at effectively no cost to themselves. The net U.S. debt to
the rest of the world tripled between 1992 and 1999. It exceeds $1.6 trillion, but net
payments on that debt in 1999 came to less than 1 percent of that sum.
In addition, unequal exchange - whereby U.S. monopolies sell their commodities above
value while buying from weaker parties below value - almost invisibly draws tens of
billions to Wall Street. Speculation, currency manipulation and other Wall Street
maneuvers draw billions more.
U.S. industry has grown since 1990. But at least 25 percent of the rest of the
capitalist world's industrial production has been idled or destroyed in the same
period. Much of this has taken place under Wall Street/International Monetary Fund
"guidance" in Warsaw Pact states now under capitalist rule, including the USSR. But
the U.S. has also overseen the "enforced destruction" of Iraq's and Yugoslavia's
economies, with devastating regional impact. And use of industrial capacity in Japan
has fallen from 90 percent to 70 percent in the face of global gluts.
Headlines blare that the current "boom" is taking place in peacetime, unlike previous
long expansions. But U.S. imperialism has been the main force in two major (and by no
means concluded) wars, in the Gulf and the Balkans, and countless less-publicized
conflicts in Latin America, Africa and Asia. The Pentagon budget is at wartime levels.
All that capital flowing into the U.S. is trying to escape wars, instability and
losses abroad. In the three months after the U.S. started bombing Yugoslavia last
March, capital flooded into the U.S. at a $1.1 trillion annual rate. Wall Street is
using its position of economic and military dominance, and the improvements in
communications and transport, to push off capitalism's toxins - starting with
unemployment - onto weaker countries, while looting them, cheapening their labor and
destroying or idling their production facilities.
In a sense, the "Great American Depression" has been pushed off onto Africa, onto Iraq
and Yugoslavia, onto the Ukraine and Romania, i.e. the states that have fallen to
counter-revolution since 1989.
Of course, "prosperity" from looting and destruction cannot go on indefinitely. And
world capitalism's unfolding crisis of overproduction is bound to affect the states
created by socialist revolutions - currently China, Vietnam, Laos, Northern Korea and
Cuba.
Workers in the U.S. - who have not fared well in this expansion - have no interest in
a temporary "stability" gained at the cost of destruction, cheapened labor and looting
abroad.
Crisis is an inevitable part of capitalism. The working class-led struggle for good
jobs and against war and racism, privation and inequality, points the way to taking
power to meet human needs.
